Reporting to the Depot

Along the main corridor in Home Depot’s 22-story suburban Atlanta headquarters, 1,800 "Blue Star" banners are mounted flat against a wall, each honoring a company employee currently deployed in Iraq.

The flags, a revival of a World War I tradition commemorating those gone to war, are significant on more than one level. Patriotism and support for troops long have been a focal point of Home Depot’s image and branding. And while that certainly makes for good public relations, it is also clearly a bedrock conviction of the company’s corporate culture.

Home Depot hired 10,000 veterans in 2003 and more than 13,000 in 2004. It expects to increase those numbers in the coming year with Operation Career Front.

Inaugurated in November, this public-private partnership with the departments of Defense, Labor and Veterans Affairs extends employment opportunities to military veterans and their spouses.

Given the company’s commitment, it’s no wonder that Home Depot was ranked No. 1 among the top military-friendly employers last year by G.I. Jobs magazine, and was also honored with a Secretary of Defense Employment Support Freedom Award. In 2002, it was the recipient of a Corporate Patriotism Award from the American Veterans Association.

But the company’s gung-ho attitude toward the military is a lot more than a feel-good proposition. Hiring vets is a three-tiered blueprint for success, says Dennis Donovan, Home Depot’s executive vice president of human resources, who, along with CEO Robert Nardelli, credits the influx of military talent with upgrading the company’s performance.

"It’s good for the individual, it’s good for the company and it’s good for the country because it rewards the brave men and women who serve in the military," Donovan says.

He says that the company isn’t yet able to quantify its military associates’ performance in terms of boosted sales, but anecdotal evidence suggests "they’re performing very, very effectively"--and in a way he thinks will prove measurable for the company’s bottom line.

Home Depot may be leading the charge to hire former military, but it’s not the only company to set its cap for the best of the estimated 200,000 to 250,000 vets who transition into the private sector annually, making them the nation’s second-largest renewable labor force, next to graduating college students. (There are currently an estimated 17 million vets in the workforce.)

Like many Fortune 500 companies that have active programs to recruit veterans, Home Depot says it’s about employee quality, not quantity. Military experience has become a highly valued commodity in corporate America. The Big Three automakers currently employ 47,000 vets, according to the President’s National Hire Veterans Committee, which was created by the Jobs for Veterans Act of 2002 and counts Nardelli among its board members.

But banish any notions of Sgt. Carter and Gomer Pyle. Today’s armed services are high-tech, and its members are endowed with expertise in a range of fields including human resources, finance, accounting and information technology--skills that are prized in the private sector.

"Corporate America has definitely started to take notice of the military," says Chris Hale, general manager of G.I. Jobs magazine. "They bring a lot of very translatable job skills to the table. Their long-term value is that they come armed with leadership skills, tons of real-life management experience and reliability."

They also bring challenges to the workforce that companies must address, says Damian Birkel, a career counselor for Williams, Robert, Young Inc. in Winston-Salem, North Carolina, who has worked with many military people and is also founder of Professionals in Transition Support Group Inc.

"There still is very black-and-white thinking in the military, and quite frankly, that’s very important. But civilian life is very gray."

"Military re-entry is a challenge because the dynamics of a civilian company are very different than the military," Birkel says. "And the longer a person has been in the military, the greater the re-entry challenge.

"There still is very black-and-white thinking in the military, and quite frankly, that’s very important. But civilian life is very gray."

Still, no one disagrees that the armed services saturate their members in experience. Hale points out that a 23-year-old Army sergeant manages 50 people; a 28-year-old catapult officer on an aircraft carrier manages 250 troops; and even the lower echelons are used to putting in 18-hour days under grueling conditions for low pay. It’s the sort of seasoning few, if any, recent college grads bring to the table.

The value is particularly acute at the senior levels, says Ira Krinsky of Korn/Ferry International Los Angeles, which has placed hundreds of vets in corporate positions during the past two years. Many career military people, he says, retire relatively young, frequently in their late 40s or early 50s, a stage in life when they bring energy, experience and enthusiasm to their second careers.

Krinsky, himself a former U.S. Army specialist who served with the 173rd Airforce Brigade in Vietnam, notes that there is a significant shift in the public’s perception of military culture that is helping to fuel corporate enthusiasm. For one thing, 9/11 did much to dispel unflattering military images held over from other eras.

"Now people see and hear stories of military accomplishments in the media all the time," Krinsky says. "The assumption used to be that they would bark orders and just tell people what to do. But look who’s in the military today: young people who grew up questioning everything, who weren’t authority-oriented. So it takes genuine leadership to get them all moving in the same direction.

"That’s always been the case, but it’s especially true now."

Terry O’Mahoney, chairman of the President’s National Hire Veterans Committee, says that hiring vets "isn’t good will, it’s good business. It’s a bargain. The government spends $17 billion a year training forces, and the soft skills they learn--performance under pressure, respect for an organization, integrity and triumph over adversity--all translate exactly to what we’re trying to do in business."

Leadership is a prime attraction, but so are problem-solving capabilities. "Anyone who ascends to any rank in the military has to be able to conceptualize and solve problems globally," says Robert Sternberg, who heads Yale’s Center for the Psychology of Abilities, Competencies and Expertise.

Going into action None of this is news to Nardelli and Donovan, who had recognized the advantages of hiring associates with military experience early on when they worked together at General Electric, where Donovan was vice president of human resources for a division from 1986-98. He also was a senior vice president at Raytheon Co. before joining Home Depot.

"Bob Nardelli and I have hired military through a big part of our careers, so we know this model works," Donovan says. "It’s in our value proposition to take care of people who are defending our country, so we take this very seriously. We look at it not as a cost but an investment. We don’t look at it as an obligation but as an opportunity."

If the country has undergone a "jobless recovery," no one bothered to mention it to Home Depot. It is the world’s largest home improvement retailer and the second-largest retailer in the United States after Wal-Mart, and it is now expanding into Mexico and China. The 25-year-old company has undergone volcanic growth, with its store count exploding by more than 400 percent in the past 10 years, from 340 stores to 1,835 today, including its Expo Design Centers.

The company’s total workforce has expanded by more than 100,000 new positions since early 2001, when Nardelli became CEO, bringing Donovan aboard a few months later. A new store opens on the average of every 48 hours.

Now with more than 325,000 associates, the company expects to hire at the rate of more than 100,000 people per year to cover both turnover and newly created jobs, the latter of which account for 20 percent to 30 percent of hires, Donovan says. (He notes that the company invests 23 million hours a year companywide in training.)

"Anyone who ascends to any rank in the military has to be able to conceptualize and solve problems globally."

This would suggest a turnover rate of about 15 percent to 25 percent, a figure that Daniel Mitchell, a professor of management and public policy at UCLA’s Anderson Graduate School of Business, says is within retail industry norms.

Profits, too, are growing. After previously reporting flagging earnings because of competition from Wal-Mart and Lowe’s, Home Depot reported third-quarter fiscal 2004 net earnings of $1.3 billion, up 20 percent, ending the quarter with $39.6 billion in total assets, including $3.4 billion in cash and shareholders’ equity of $23.7 billion.

At a time when the most pressing issues facing many executives are related to hiring and managing talent, and when plenty of people need jobs, the trick is attracting the right people. Home Depot receives 11 million applications a year from 3 million applicants, most of whom apply more than once.

When Nardelli and Donovan were new at the company, they realized that Home Depot had outgrown its decentralized human resources infrastructure. As they overhauled the system, they realized that there was an acute need to place a new emphasis on talent.

With customers ranging from professional builders to befuddled amateurs, the ability of employees to deal with diversity was a must. The two executives recognized that Home Depot thrives on human interaction, meaning that store customers need a good deal of tender loving care, and workers therefore need to be especially savvy and motivated.

Previously, the company had been "hiring more to numbers than competencies," Donovan says, and many of its store managers were failing. In the meantime, analysis showed that there was an especially strong correlation between customer care and profits. Individual attention from knowledgeable, motivated associates drives up sales.

People transitioning from the military seemed the perfect talent pool from which to draw.

"We find that there is a level of maturity that people coming out of the military have," Donovan says. "There is certainly leadership, and it’s a great place for us to source people with logistics backgrounds, plumbers, electricians and carpenters. They have discipline, and we can see that discipline at work in our stores."

The plan for Operation Career Front, an extension of a job partnership formed with the Department of Labor in 2002, was a year in the making. The program reaches out to veterans through transition assistance programs and Web links with the departments of Defense, Labor and Veterans Affairs.

Also flagged for special consideration are the roughly 400,000 military spouses whose careers are interrupted by transfers to new bases. The company strives to place them in Home Depot stores near their new homes, whether or not they’ve worked for the retailer before.

The company also continues to provide benefits for its associates pressed into service, all of whom have jobs waiting for them upon their return.

Even before Operation Career Front, Home Depot actively recruited retired military. Its Store Leadership Program, launched 2½ years ago to groom the best and brightest as store managers, is a case in point. The intensive 24-month program involves more than 250 hours of classroom learning, four different job rotations and mentoring by company leaders. To qualify, candidates must have a minimum of four years’ experience in business or retail management--or four years as a commissioned military officer.

Although the program was not specifically created to target them, nearly 70 percent of those accepted are former military; of the program’s 800-plus combined recent alumni and current participants, 530 are junior military officers, including 119 graduates from such military academies as West Point, Annapolis and the Air Force Academy.

They are often recruited at military outplacement fairs and, like others in the program, are coached by senior managers, including Nardelli. (The company declines to disclose the total number of veterans it employs, nor will it reveal the cost of Operation Career Front.)

"We just found that when we put them through the assessment during hiring, they excel," Donovan says.

Soldier execs Among those who stood out is former Navy Lt. Chris Harkness, 31, who spent five years on a nuclear submarine. He became a Home Depot store manager through the Store Leadership Program and is now Home Depot’s director of implementation, a position created to standardize the application of companywide directives from merchandising to finance.

Military training, he says, breeds confidence, a necessary attribute in managing a typical Home Depot store, which normally grosses $50 million annually.

"Military structure is very similar to how our stores are structured," Harkness says. "A store manager is basically the equivalent of a ship captain. You’ve got a leadership team under you, and I think the relationships you need to build between your hourly and management associates are a natural fit for military leaders."

Also stationed at Home Depot headquarters is Maj. Mike Jernigan, one of nine Marine Corps Corporate Fellows, whose mission is to study strategic thinking, operational excellence and crisis decision-making and take lessons learned from the corporate world back to the Marines. Conversely, he also provides military insights that might be valuable to Home Depot.

"You may not believe it, but the Marine Corps embraces change," says Jernigan, a fit 35-year-old officer who saw active duty in Iraq, where he swept minefields as a combat engineer. "The corporate world and the military are really quite similar. At the end of the day, we just keep score differently."

Nardelli wants Jernigan to learn about the company from top to bottom, and has given him access to top-level meetings.

Others, however, attest to a sometimes difficult cultural adjustment for transitioning military. "When you walk into a room full of military people, you instantly know by the rank on their sleeves where you stand with them," says G.I. Jobs’ Hale.

"In the corporate world, if you go to a Christmas party, you may not know whether you’re talking to a manager or the janitor. That’s part of the learning process, and it can take some adjustment."

For companies, there is also the possibility that reservists and other retired military may be unexpectedly pressed into active duty, and companies have to accommodate that, says Margaretta Noonan, executive vice president of human resources for the Hudson Highland Group Inc. in New York.

"There are two problems," Noonan says. "One, you temporarily lose some people. Another issue is the people that are left behind in a call-up. Co-workers are impacted; family is impacted." Also, the death of a co-worker in action can be devastating to an organization, she says, stressing that there is a real need for companies to foster a sense of community.

That’s a challenge Home Depot has seized. When the company donated $1 million toward the upkeep on stateside homes of military personnel stationed abroad through Project Home Front, associates stepped in and matched the sum with 1 million volunteer hours.

"Anybody can give money to some organization, but we wanted to do something that demonstrates our values and our commitment," Donovan says. "We thought, ‘They’re protecting our homeland, let’s protect their home front.’"